Sorry - let me clarify - Purchasing property always involves evaluation of the market and looking for a bargain. No matter what the environment. If you go talk to a friendly realtor and buy the first thing they point at, you're going to get screwed. Being succesful in real estate depends almost entirely on the initial deal. You can also potentially make money doing the old fixer-upper routine, if you have the time and inclinatino. Prices may be inflated right now - a lot depends on the market you're in, but you also have to consider that there are a lot of folks buying houses as primary residences right now just because of the low interest rates. As the rates rise (and they will) competition for rentral housing will grow, allowing rent increases etc. I do agree with you about Treasuries etc. Any fixed income investment right now is a sure way to lose money. Z1
Quite interesting to be called a fool by people who did not follow the details of the initial request. Once more for those who may not speak english as their native language. The poster requested a "risk free" investment. As mentioned in my response, "risk free" is a term used by those WITH AN EDUCATION IN FINANCE to mean a government backed security (usually a treasury instrument). They are called risk free because there is NO counterparty risk, no default risk, and no interest risk AS LONG AS THE INVESTOR HOLDS THE PHYSICAL INSTRUMENT UNTIL THE REDEMPTION DATE. Once again I repeat my comment that it is not a good idea to purchase long dated treasuries. Instead I recommend 2 or 5 year instruments. Also I suggest that the investor SHOULD NOT USE A BOND FUND. Why? Because in a bond fund you may see loss of principal. I don't think I can make this any clearer. Suggestions about real estate, currency investment, etc are not appropriate because they are not RISK FREE. Finally I mention that holding money in Bank CD's is appropriate because banks INSURE CD accounts of $100,000 or less. At the risk of seeming impolite, take a moment to think before you comment. Regards, Steve46 P.S. Bufferman, your comment about no investment being risk-free is not correct. Any student of finance will tell you that US government backed securities are considered risk free because they are backed by the "full faith and credit" of the US government (the people who own the money printing presses).
I didn't read this entire thread but some of the advice I did read was just so off base I can hardly believe it was suggested. There are only three investments that would fit the request of the creator of this thread. (I assume this person lives in the U.S.) 1. Short term U.S. Treasuries with the understanding that the money may not be available risk free until maturity. 2. U.S. bank CD's with FDIC insurance. Early withdrawl will have penalties. 3. Most U.S. Treasury money market funds (not to be confused with open end or closed end bond funds). If a long term investment would be acceptable for this individual (i.e. doesn't expect to need money for some time) there are some longer term varieties of the above investments. However, until interest rates rise substantially, remain in shorter term instruments regardless of the low rates currently. ALL other investments would not be appropriate for this individual. Remember: Most people should be more interested in the RETURN OF THEIR MONEY than THE RETURN ON THEIR MONEY.
Steve46 I did my education in finance and know all too well that every Government wants its citizens to have blind faith in ârisk freeâ Government paper (itâs funny how less risk is associated with this paper when they apply the term securities to it). How else would Governments continue to grow at the rate in which they do without having to back the currency that they issue with something tangible? The same nut cases that were preaching Random Walk Theory at school were also spoon feeding us with this ârisk freeâ non-sense. I also thankfully, in my own time, added to my education in history, and know too well how often Governments have screwed their citizens who were foolish enough to believe in ârisk freeâ Government Securities. Now, I must say that prior to making my post I only briefly scanned the previous posts and all I saw was a bunch of advice on Treasuries, so I did not have you in mind at all when I made my post. I responded in a way that I would if anyone was touting Treasuries as an investment at this late stage in the cycle, so my apologies to you if you took it personally. I whole heartedly agree with your advice on avoiding bond funds and long dated securities. Your advice on holding money in a CD is probably the wisest and safest here. Just look at Buffet, he is sitting on 32 billion in cash, as I recall, waiting for the opportunities which will eventually come his way.
BVM88, if Mr. Buffett is sitting on $32B in cash, he is holding very short term U.S. Treasury securities. Only if the U.S. Dollar becomes worthless will there be a safer place to put your U.S. currency.
What I take personally is when people don't take time to think. In my opinion, no one with a formal education in finance would make the statements you are making. Name a single instance when the government of the United States has defaulted on a treasury. Take your time. I'm in no hurry.
What exactly do you want me to say? What prompted me to make my initial post was Buffermanâs last or 2nd last post in which he said that after listening to the advice given, Treasuries sounded like a good idea. I merely wanted to point out to him that IMHO Treasuries may not be such a good idea for the reasons that I have already outlined. I really have said all I needed to say to Bufferman and to you on this thread. I donât recall having said that the US Government will default on its debts. What I primarily had in mind with reference to the US when I made my remarks about being screwed by the Government was the inflation risk. But yes, if the US Government cannot inflate its way out of its debt dilemma, I would expect it to eventually have to default on its obligations one way or another. The debt burden is just not sustainable in the long run. This is just my opinion, but since I can comfortably retire tomorrow if I so choose through having followed my opinions throughout the years and have been in this position for three years now, Iâll stick to what I believe. Whatever you believe is also fine by me. PS If you donât believe that the US Government will find one way or another to eventually screw Bond holders out of their money have a look at this: http://www.uncle-scam.com/Breaking/jan-04/br-7.html If this report is credible then you have your single instance.
The US Government defaulted on its obligation to make the US Dollar redeemable for gold in the early 1930s. It also made gold ownership illegal at the same time. On 15 August 1971 Nixon closed the gold window to US trade partners. Separately, the US Dollar has lost purchasing power since 1914, therefore investment in US Dollar denominated assets does carry some purchasing power risk. Even if these do not count as having defaulted, that it hasn't in the past does not guarantee that the US Government will not default in the future.